EXHIBIT 99.1
FINANCIAL CONTACT: JAMES S. GULMI (615) 367-8325
MEDIA CONTACT: CLAIRE S. MCCALL (615) 367-8283
GENESCO REPORTS SECOND QUARTER SALES AND EARNINGS
NASHVILLE, Tenn., Aug. 21, 2003 - Genesco Inc. (NYSE: GCO) today reported a net
loss of $891,000, or ($0.04) per share, for the second quarter ended August 2,
2003, compared with net earnings of $4.0 million, or $0.17 per diluted share,
for the second quarter last year. These results, which were better than
expectations, include a net loss of $0.08 per diluted share related to the
redemption of $103 million of Convertible Subordinated Notes during the quarter.
Excluding the refinancing-related expenses, the Company reported earnings per
diluted share of $0.03 (see Table 3). Net sales for the quarter were $179
million compared to $175 million for the second quarter of fiscal 2003.
The notes were called for redemption on June 24, 2003, upon completion
of the sale by the Company of $86 million of Convertible Subordinated Debentures
due 2023. The Company previously announced that the incremental net interest
expense while both issues were outstanding during the 30-day call period for the
Notes, and the loss on early retirement of the Notes (consisting of unamortized
deferred note expense and redemption premium) would reduce diluted earnings per
share for the quarter by $0.08.
Genesco President and Chief Executive Officer Hal N. Pennington, said,
"Our better than expected results for the quarter were primarily driven by
stronger comps at Journeys and a continued robust performance at Underground
Station. Both of these chains had a solid start on back-to-school, and their
positive momentum late in the quarter has continued into August. Journeys' same
store sales declined 1% for the quarter, which was better than the 3% decline we
had expected. Underground Station posted a 9% same store sales increase, on top
of 19% in the second quarter last year. We believe that both these businesses
are well positioned for the second half.
-more-
"Although Johnston & Murphy faces continuing short-term challenges, we
saw in the second quarter some encouraging indications that the turnaround there
is working. Same store sales in Johnston & Murphy retail increased 2% for the
quarter.
"Both the Jarman retail stores and Dockers Footwear performed below
expectations. Jarman's same store sales declined 14%, reflecting its inability
to participate in the women's and fashion athletic trends that are leading both
Journeys' and Underground Station's strong early season performance. Dockers'
performance continues to reflect conditions in its market segment as well as
lower than expected sell-throughs in one of its product lines. Primarily because
of these businesses and the continuing challenges at Johnston & Murphy, we
believe it is prudent to adopt a more conservative outlook for the second half
of the year."
The Company now expects third quarter sales to range from $222
million to $226 million and earnings per share to range from $0.40 to $0.43. For
the fourth quarter, the Company expects sales to range from $265 million to $269
million and earnings per share to range from $0.83 to $0.89. For fiscal 2004, it
expects sales to range from $859 million to $867 million and earnings per share
to range from $1.42 to $1.50, excluding the loss on early retirement of debt
associated with the second quarter refinancing, or from $1.34 to $1.42 per
share, including the loss on early retirement. The Company's earnings per share
expectations for both quarters and for the year reflect changes in the number of
shares deemed to be outstanding due to the issuance of the Convertible
Subordinated Debentures.
Pennington concluded, "We move into the second half of the year with
a strong balance sheet and positive momentum at Journeys and Underground
Station, and while we still have work to do at Johnston & Murphy, we believe our
strategies are sound and we continue to see progress. At the same time, we are
responding to the current challenges we are facing in our Jarman stores and at
Dockers and we are committed to improving those businesses. We remain focused on
long-term growth and profitability in all of these divisions."
This release contains forward-looking statements, including those
regarding the Company's sales and earnings outlook and all other statements not
addressing solely historical facts or present conditions. Actual results could
turn out materially different from the expectations
reflected in these statements. A number of factors could cause differences.
These include weakness in consumer demand for products sold by the Company,
fashion trends that affect the sales or product margins of the Company's retail
product offerings, changes in buying patterns by significant wholesale
customers, disruptions in product supply or distribution, further unfavorable
trends in foreign exchange rates and other factors affecting the cost of
products, changes in business strategies by the Company's competitors, the
Company's ability to open, staff and support additional retail stores on
schedule and at acceptable expense levels and to renew leases in existing stores
on schedule and at acceptable expense levels, variations from expected
pension-related charges caused by conditions in the financial markets, and the
outcome of litigation and environmental matters involving the Company.
Forward-looking statements reflect the expectations of the Company at the time
they are made. The Company disclaims any obligation to update such statements.
The Company's live conference call on August 21, 2003, at 10:00 a.m.
(Central time) may be accessed through the Company's internet website,
www.genesco.com. The Company expects to discuss results from the second quarter,
and its current expectations for the third quarter and fiscal year ending
January 31, 2004, during the call. To listen live, please go to the website at
least 15 minutes early to register, download and install any necessary software.
Genesco, based in Nashville, sells footwear and accessories in more
than 1,000 retail stores in the U.S., principally under the names Journeys,
Journeys Kidz, Johnston & Murphy, Jarman and Underground Station, and on
internet websites www.journeys.com and www.johnstonmurphy.com. The Company also
sells footwear at wholesale under its Johnston & Murphy brand and under the
licensed Dockers brand. Additional information on Genesco and its operating
divisions may be accessed at its website www.genesco.com.
TABLE 1
GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
Three Months Ended Six Months Ended
----------------------------- -----------------------------
AUGUST 2, August 3, AUGUST 2, August 3,
In Thousands 2003 2002 2003 2002
------------ ------------ ------------ ------------
Net sales $ 179,478 $ 174,842 $ 372,224 $ 365,435
Cost of sales 95,989 91,991 200,643 192,436
Selling and administrative expenses 80,271 74,666 160,924 149,892
Restructuring adjustment (gain) (139) -- (139) --
------------ ------------ ------------ ------------
Earnings from operations before interest and other 3,357 8,185 10,796 23,107
Loss on early retirement of debt 2,581 -- 2,581 --
Interest expense, net* 2,149 1,922 4,181 3,594
------------ ------------ ------------ ------------
PRETAX EARNINGS (LOSS) (1,373) 6,263 4,034 19,513
Income tax expense (benefit) (482) 2,300 1,588 7,348
------------ ------------ ------------ ------------
NET EARNINGS (LOSS) $ (891) $ 3,963 $ 2,446 $ 12,165
============ ============ ============ ============
EARNINGS PER SHARE INFORMATION
Three Months Ended Six Months Ended
----------------------------- ----------------------------
AUGUST 2, August 3, AUGUST 2, August 3,
In Thousands (except per share amounts) 2003 2002 2003 2002
------------ ------------ ------------ ------------
Preferred dividend requirements $ 73 $ 74 $ 147 $ 148
Average common shares - Basic EPS 21,754 21,914 21,748 21,895
Basic net earnings (loss) per share $ (0.04) $ 0.18 $ 0.11 $ 0.55
Average common and common
equivalent shares - Diluted EPS 21,754 22,416 22,041 27,318
Diluted net earnings (loss) per share $ (0.04) $ 0.17 $ 0.10 $ 0.51
* Includes $0.2 million additional net interest expense due to early
retirement of debt.
GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
Three Months Ended Six Months Ended
----------------------------- -----------------------------
AUGUST 2, August 3, AUGUST 2, August 3,
In Thousands 2003 2002 2003 2002
------------ ------------ ------------ ------------
Sales:
Journeys $ 97,474 $ 91,681 $ 196,189 $ 183,155
Underground Station/Jarman Group 30,722 30,183 65,295 63,382
Johnston & Murphy 39,392 39,541 79,608 81,906
Dockers 11,821 13,437 31,010 36,992
Corporate and Other 69 -- 122 --
------------ ------------ ------------ ------------
NET SALES $ 179,478 $ 174,842 $ 372,224 $ 365,435
============ ============ ============ ============
Pretax Earnings (Loss):
Journeys $ 6,711 $ 7,497 $ 12,274 $ 15,700
Underground Station/Jarman Group 231 1,153 1,791 3,803
Johnston & Murphy 174 1,365 1,974 5,472
Dockers (263) 1,325 2,290 4,112
Corporate and Other* (3,496) (3,155) (7,533) (5,980)
------------ ------------ ------------ ------------
Operating income 3,357 8,185 10,796 23,107
Loss on early retirement of debt 2,581 -- 2,581 --
Interest, net 2,149 1,922 4,181 3,594
------------ ------------ ------------ ------------
TOTAL PRETAX EARNINGS (LOSS) (1,373) 6,263 4,034 19,513
Income tax expense (benefit) (482) 2,300 1,588 7,348
------------ ------------ ------------ ------------
NET EARNINGS (LOSS) $ (891) $ 3,963 $ 2,446 $ 12,165
============ ============ ============ ============
* Includes a $0.1 million restructuring adjustment in the second quarter and
six months of Fiscal 2004 and $0.5 million of professional fees and
severance charges in the second quarter and six months of Fiscal 2003.
GENESCO INC.
CONSOLIDATED BALANCE SHEET
AUGUST 2, August 3,
In Thousands 2003 2002
------------ ------------
ASSETS
Cash and short-term investments $ 32,968 $ 32,214
Accounts receivable 14,579 16,785
Inventories 213,440 202,062
Other current assets 24,910 26,670
------------ ------------
Total current assets 285,897 277,731
------------ ------------
Plant, equipment and capital leases 125,865 128,617
Other non-current assets 24,507 13,314
Non-current assets of discontinued operations* -- 1,085
------------ ------------
TOTAL ASSETS $ 436,269 $ 420,747
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 80,074 $ 82,305
Other current liabilities 36,750 35,899
------------ ------------
Total current liabilities 116,824 118,204
------------ ------------
Long-term debt 86,275 103,271
Other long-term liabilities 47,317 24,565
Shareholders' equity 185,853 174,707
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 436,269 $ 420,747
============ ============
* Non-current assets of discontinued operations include Volunteer Leather.
TABLE 2
GENESCO INC.
RETAIL UNITS OPERATED - SIX MONTHS ENDED AUGUST 2, 2003
BALANCE BALANCE
02/01/03 OPEN CONVERSIONS CLOSE 08/02/03
------------ ------------ ------------ ------------ ------------
Journeys 614 28 0 1 641
Journeys 579 25 0 1 603
Journeys Kidz 35 3 0 0 38
Underground Station/Jarman Group 229 10 0 4 235
Underground Station 114 10 3 2 125
Jarman Retail 115 0 (3) 2 110
Johnston & Murphy 148 4 0 0 152
Shops 115 2 0 0 117
Factory Outlets 33 2 0 0 35
------------ ------------ ------------ ------------ ------------
Total Retail Units 991 42 0 5 1,028
============ ============ ============ ============ ============
RETAIL UNITS OPERATED - THREE MONTHS ENDED AUGUST 2, 2003
BALANCE BALANCE
05/03/03 OPEN CONVERSIONS CLOSE 08/02/03
------------ ------------ ------------ ------------ ------------
Journeys 631 10 0 0 641
Journeys 594 9 0 0 603
Journeys Kidz 37 1 0 0 38
Underground Station/Jarman Group 236 2 0 3 235
Underground Station 122 2 3 2 125
Jarman Retail 114 0 (3) 1 110
Johnston & Murphy 150 2 0 0 152
Shops 116 1 0 0 117
Factory Outlets 34 1 0 0 35
------------ ------------ ------------ ------------ ------------
Total Retail Units 1,017 14 0 3 1,028
============ ============ ============ ============ ============
CONSTANT STORE SALES
Three Months Ended Six Months Ended
---------------------------- ----------------------------
AUGUST 2, August 3, AUGUST 2, August 3,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Journeys -1% -3% -2% -3%
Underground Station/Jarman Group -3% 20% -2% 19%
Underground Station 9% 19% 8% 17%
Jarman Retail -14% 20% -12% 20%
Johnston & Murphy 2% -2% -3% 0%
Shops 1% -1% -3% -1%
Factory Outlets 8% -4% 0% 2%
------------ ------------ ------------ ------------
Total Constant Store Sales -1% 1% -2% 2%
============ ============ ============ ============
TABLE 3
GENESCO INC.
RECONCILIATION OF ACTUAL EPS TO EPS EXCLUDING REDEMPTION RELATED EXPENSES
SECOND QUARTER ENDED AUGUST 2, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Earnings Shares EPS
------------- ----------- -----------
Net loss as reported $ (891)
Dividends (73)
-------------
Loss available to common shareholders $ (964)
-------------
Shares as reported 21,754
Diluted EPS as reported $ (0.04)
Adjustments: (net of tax)
Loss on early retirement of debt $ 1,600 $ 0.07
Additional net interest during 30-day call period 128 $ 0.01
------------- -----------
Total adjustments, net of tax $ 1,728 $ 0.08
------------- -----------
Adjusted earnings available to common shareholders $ 764
=============
Adjusted shares for earnings* 22,074
Adjusted diluted EPS $ 0.03
===========
* Shares include options of 320 that were excluded from the loss per share
calculation.